The scandal dramatically unfolding at Walmart, the one involving allegations that the retailer’s Mexican unit bribed officials to gain favorable store locations, then covered it up corporately, all but overshadowed the excellent Annual Meeting the National Association of Chain Drug Stores conducted last month in Florida.

Let’s not rush to judge Walmart

May 14th, 2012

by David Pinto, Editor

The scandal dramatically unfolding at Walmart, the one involving allegations that the retailer’s Mexican unit bribed officials to gain favorable store locations, then covered it up corporately, all but overshadowed the excellent Annual Meeting the National Association of Chain Drug Stores conducted last month in Florida.

Many meeting attendees rushed to convict the world’s largest retailer. Others justified Walmart’s behavior, explaining that the company responded appropriately to the way business has traditionally been conducted in Mexico.

But the more thoughtful people at the NACDS Annual Meeting held a broader, more carefully constructed view, specifically that Walmart has yet to be convicted of any violations and, at any rate, the events in question are six years old.

Two other observations need to be made here. The first is that the people most dramatically impacted by the unfolding scandal are the almost 2 million hard-working, loyal Walmart associates, those individuals who deserve, and rightly receive, much of the credit for Walmart’s phenomenal success over the past three decades. These employees believe that their company has betrayed them. As a result, even at this early date, they can’t be faulted for feeling confused, disillusioned, discouraged, abandoned, disheartened and ­disoriented.

The second is that, for all its current tribulations, Walmart long ago established its reputation as one of the world’s most successful and trusted companies. Statistics alone confirm that status: annual sales of some $444 billion from some 200 million customers who weekly visit more than 10,000 Walmart stores in 27 countries and provide a transactional total that generates earnings in excess of $15 billion annually. No company, and certainly no retailer, even approaches those performance figures. And, more to the point, none has done so as the direct result of the active participation of so large a customer base.

Over a similar time frame the world’s largest retailer has justly acquired a reputation as an ethically honest company. Given its size, its impact on the world’s business community and the opportunities it must surely have encountered to take short cuts, Walmart has remained relatively free of scandal.

But let’s assume the worst. Let’s assume, if only for purposes of this exercise, that certain people at Walmart de México paid money to obtain favorable locations and, when it was brought to the attention of the retailer’s U.S. leaders, they chose to ignore it.

Let’s further assume the worst possible outcome, that the company is forced to reevaluate and recast its business model. In short, let’s assume that the Walmart that the retailing community has come to know, respond to and, unlikely as it sounds, depend on to provide both motivation and competition disappears, reappearing in a more benign form in the coming years.

Too many industry people silently or vocally support this outcome, though in truth it would not be in the best interests of the retail community. Many others have rushed to condemn Walmart even before any allegations have been proven. And make no mistake: It would be an error to prematurely judge a company that has both changed and improved the retail landscape in America.

Much of the anti-Walmart sentiment, to be sure, is grounded in the retailer’s size and the degree of success it has achieved, often at the expense of its competitors. Much of it is the very human emotion of wishing the worst for your competitors. Some of it is based on the uniquely American preoccupation with initially boosting, then tearing down, those individuals and institutions that rise to the top.

But this position ignores a hard and inescapable reality of the retail marketplace of the early 21st century. It ignores the fact that Walmart is a very special retailer, as good as this country has thus far been able to produce. No scandal, misstep, judgmental error, ill-considered action or cover-up by a few within the organization, no matter the level, can alter that fact.

Now, while awaiting developments, would be a good time for this industry to pause for a moment to appreciate what Walmart has meant — and will hopefully continue to mean — to both the retail community and the wider world beyond that community.